Top 3 Stocks That DIIs Are Snapping Up in a Market Downturn

As the stock market faced turbulence in early 2025, Domestic Institutional Investors (DIIs) took a bold stance by purchasing Indian equities at unprecedented levels. During the first quarter of the year, specifically Q4FY25, these investors netted a remarkable ₹1,16,082 crore in equities, even as overall buying momentum experienced a gradual decline month by month. This article delves into three notable stocks that captured the interest of DIIs, showcasing their increased stakes despite the fluctuating market conditions.

Declining Purchases Amidst Volatility

In January 2025, DIIs made headlines with a net equity purchase of ₹55,074 crore, but this figure steadily decreased to ₹47,550 crore in February, and further plummeted to ₹13,458 crore by March. As of April 25, 2025, their net equity purchases totaled ₹10,621 crore, indicating a continued downward trend. Yet, in the face of this decline, DIIs strategically increased their holdings in select companies, demonstrating their belief in the long-term potential of these investments.

Top Stocks Gaining DII Attention

Here are three stocks that saw significant DII investment in the past quarter, with DIIs amassing over 15% stakes in each.

1. Team Lease Services Ltd. (TEAMLEASE)

Team Lease Services has established itself as a leader in employment services, providing staffing, training, and payroll solutions. In Q4FY25, DIIs boosted their stake in this company by 10.54%, raising their total holding to 47.65%. This increased investment is likely driven by the company’s recent profit recovery after a slowdown in Q1FY25. By Q3FY25, Team Lease reported a modest 2.33% year-on-year increase in net profit, with earnings per share (EPS) climbing from ₹14.66 to ₹16.95.

Despite a current Price-to-Earnings (P/E) ratio of 31.8, higher than the industry average of 27.0, it remains significantly lower than its historical median of 50.4. Key mutual funds that participated in this investment include:

ICICI Prudential Technology Fund: 6.94% stake
Franklin India Balanced Advantage Fund: 7.02% stake
SBI Retirement Benefit Fund – Aggressive Plan: 4.58% stake

2. Centum Electronics Ltd. (CENTUM)

Centum Electronics, a prominent player in electronics system design and manufacturing, saw DII holdings rise by 7.30% in Q4FY25, bringing their total stake to 15.36%. Despite facing losses since Q4FY24, the company managed to stabilize its revenue, achieving a 13% quarter-on-quarter growth in Q3FY25.

Several factors may have influenced DIIs’ interest, including a robust order book and improvements in working capital management. Notable mutual funds that increased their stakes in Centum include:

HDFC Mutual Fund – HDFC Multi Cap Fund: Increased from 4.33% to 8.23%
3P India Equity Fund 1: Raised stake to 4.39%
3P India Equity Fund 1M: Acquired a 1.08% stake

3. TBO Tek Ltd. (TBO TEK)

TBO Tek, a technology platform specializing in travel bookings, experienced a 6.10% increase in DII holdings during Q4FY25, elevating their stake to 17.88%. Despite trading near its all-time low of ₹986 and a relatively high P/E ratio of 57.2, the stock remains attractive due to its impressive Return on Capital Employed (ROCE) of 42.9% and Return on Equity (ROE) of 46.0%.

Sales growth showed promising signs, with a 27.92% increase in Q2FY25, further rising to 29.17% in Q3FY25. Key mutual funds investing in TBO Tek include:

Nippon Life India Trustee Ltd. (Nippon India Smallcap Fund): 3.46% stake
SBI Technology Opportunities Fund: Increased to 3.33%
ICICI Prudential India Opportunities Fund: 2.40% stake

Additional DII Investments

In addition to the above-mentioned stocks, DIIs have also increased their stakes in:

OneSource Specialty Pharma Ltd. (ONESOURCE): Increased by 5.47%, total holding now 18.03%
AU Small Finance Bank Ltd. (AUBANK): Up by 5.38%, bringing total holding to 27.16%

Conclusion: A Strategic Investment Approach

The significant investments by DIIs in these select stocks amidst a declining market may indicate a belief in their growth potential. As these institutions continue to adjust their portfolios, it will be intriguing to observe whether they maintain these positions in the long term, especially given the ongoing reduction in overall equity purchases.

Investors are encouraged to conduct thorough research and consider consulting with financial advisors before making any investment decisions. The insights provided here are intended for educational purposes and should not be construed as investment recommendations.